The dreaded 90 day closure letter

[LuckyLuke]

Howdy folks,

I recently received an email from Merrill Lynch advising me that I had 90 days to show my proof of US residency or they will close my IRA account. Some googling shows this is apparently a common occurrence of major US banks since 2021 when they began closing accounts with foreign addresses.

Thing is I never changed my TX residence address, because I still maintain a house that I rent out in the US, but their system detected that I was continually accessing my account from an Argentina IP address which flagged it for closure. For those of you not using a VPN, let my carelessness be your warning.

The email says "you can provide two forms of address verification such as: a driver's license, utility bill, or rental agreement.". No problem, I sent them my Texas drivers license and my recent mortgage statement. Done....right? Nope, they are still asking for utility bills, which are all in the name of my tenant.

Has anyone else run into this? I've heard of Argentine banks giving US citizens a hard time, but I haven't seen any expats being treated this way by their US Banks.

 

[carride]

Some people have been known to show their rental insurance policy as address verification. A policy is possible if storing some things at friends or family’s house and cost only a few $100 per year.

 

[Redpossum]

Howdy folks,

I recently received an email from Merrill Lynch advising me that I had 90 days to show my proof of US residency or they will close my IRA account. Some googling shows this is apparently a common occurrence of major US banks since 2021 when they began closing accounts with foreign addresses.

Thing is I never changed my TX residence address, because I still maintain a house that I rent out in the US, but their system detected that I was continually accessing my account from an Argentina IP address which flagged it for closure. For those of you not using a VPN, let my carelessness be your warning.

The email says "you can provide two forms of address verification such as: a driver's license, utility bill, or rental agreement.". No problem, I sent them my Texas drivers license and my recent mortgage statement. Done....right? Nope, they are still asking for utility bills, which are all in the name of my tenant.

Has anyone else run into this? I've heard of Argentine banks giving US citizens a hard time, but I haven't seen any expats being treated this way by their US Banks.

I wonder if this is required by law, or just the bank's decision.

 

[LuckyLuke]

I wonder if this is required by law, or just the bank's decision.

This is the most frustrating part...based on what I saw, there's actually no law saying they are required to do this. It's their own internal compliance departments that are closing them to avoid the risk of violating any possible tax treaties.

My only options at this point are to liquidate the holdings (generating a taxable event) or to put the rental home utilities in my name (which carries exposure risk of non-payment in the future). I asked the IRA what they could accept for documentation if the utilities were in someone else's name (such as a family member), and they started asking about seeing the utility debits in my bank account.

A shame really, but I suppose it's a risk all US citizens should consider before moving around for an extended period.

 

[carride]

I have not paid enough attention, though thought it had to do with the type of investments and that it was only restricting new contributions to the IRA. Mutual funds might have a blanket to restrict everything since it’s too difficult to track which investments contained within each fund may or not involve FATCA. An IRA should have other investment choices besides mutual funds. The worst case is sell the investments and keep the dollars in the IRA to avoid a IRS tax penalty. Giving you time to figure it out, perhaps moving the uninvested IRA to another company.

https://www.americansabroad.org/mutual_fund_restrictions

 

[lunar]

My only options at this point are to liquidate the holdings...
or to put the rental home utilities in my name ...

Is Merrill Lynch the only game in town? Have you considered transferring your IRA assets to another provider that doesn't ask for utility bills?

And you overrate the VPN issue. They can still see that you're coming from a VPN provider, even if your IP address resolves to the US.

... too difficult to track which investments contained within each fund may or not involve FATCA.

FATCA does not apply to money stored in the U.S.

 

[Lisandra]

I use Fidelity Investments, which I have used for many years before expatriating. My restrictions are limited to (a.) not being able to invest in mutual funds and (b.) not receiving advice from Fidelity staff. Neither of which I care about. I call them only for administrative account issues.

If you return to the USA, you might consider them. There is nothing that I need to do with Fidelity that I cannot do i.e. deposit money into Fidelity accounts from various sources; pay bills and transfer money to the U.S. accounts my Argentine financero.

You can read Fidelity's expat restrictions:

FAQs for Investors Living Outside the US - Fidelity

Good luck.

 

[Lisandra]

Is Merrill Lynch the only game in town? Have you considered transferring your IRA assets to another provider that doesn't ask for utility bills?

And you overrate the VPN issue. They can still see that you're coming from a VPN provider, even if your IP address resolves to the US.


FATCA does not apply to money stored in the U.S.

"They can still see that you're coming from a VPN provider, even if your IP address resolves to the US."

Not if the VPN is routed through a proxy i.e. Shadowsocks or a SOCKS5 proxy.

 

[carride]

FATCA does not apply to money stored in the U.S.

yes I know. The article I posted only states the complications for the Fund managers to be compliant. Regardless of what the FATCA rules are, they are complicated enough that the managers make this type of general restriction that the OP is experiencing.

The helpful FAQ from Fidelity that @Lisandra attached also highlights Mutual Funds as an issue without explaining why.
As of August 1, 2014 customers residing outside the United States will not be allowed to purchase shares of mutual funds

 

[Lisandra]

yes I know. The article I posted only states the complications for the Fund managers to be compliant. Regardless of what the FATCA rules are, they are complicated enough that the managers make this type of general restriction that the OP is experiencing.

The helpful FAQ from Fidelity that @Lisandra attached also highlights Mutual Funds as an issue without explaining why.
As of August 1, 2014 customers residing outside the United States will not be allowed to purchase shares of mutual funds

The reason why is explained here:

https://www.americansabroad.org/mutual_fund_restrictions#:~:text=Because%20foreign%20jurisdictions%20are%20unable,back%20in%20the%20United%20States